August 10, 2000
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Gish
Biomedical, Inc. which will be held on Tuesday, September 19, 2000 at 9:00 a.m.
in the corporate offices of Gish Biomedical, Inc., at 2681 Kelvin Avenue,
Irvine, California 92614.
This booklet includes the Notice of the Annual Meeting of Shareholders and the
Proxy Statement. The Proxy Statement describes the business that will be
transacted at the Annual Meeting and also provides important information about
the Company and the items to be voted upon that you should consider when you
vote your shares.
At this year's meeting, among other things, you will be asked to consider and to
vote upon the election of five directors. All of these nominees currently are
directors of the Company. Their diversified experience and backgrounds have
enabled them to contribute significantly to the success of the Company.
Accordingly, your Board of Directors recommends that you vote FOR all of the
nominees.
You also will be asked to approve the Board of Directors' appointment of Ernst &
Young, LLP as the Company's independent auditors for the 2000 fiscal year. Your
Board of Directors considers the firm well qualified for this position and
therefore recommends that you vote FOR this proposal.
Each of the items upon which you will be asked to vote is discussed more fully
in the attached Proxy Statement. We urge you to read the Proxy Statement
completely and carefully so that you can vote your shares on an informed basis.
Your vote is important! We look forward to receiving your proxy form and hope
that you will be able to join us at the Annual Meeting.
Sincerely yours,
/s/ John W. Galuchie, Jr.
-------------------------------
John W. Galuchie, Jr.
Chairman
<PAGE>
GISH BIOMEDICAL, INC.
2681 Kelvin Avenue
Irvine, California 92614
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 19, 2000
The Shareholders of Gish Biomedical, Inc.
Notice is hereby given that the Annual Meeting of Shareholders of Gish
Biomedical, Inc., a California corporation (the "Company"), will be held at the
offices of the Company, 2681 Kelvin Avenue, Irvine, California, 92614, at 9:00
a.m., Pacific Daylight Time, on September 19, 2000 for the following purposes:
(1) To elect five directors, the names of whom are set forth in
the accompanying proxy statement, to serve until the next
Annual Meeting.
(2) To ratify the selection of Ernst &Young, LLP as auditors for
the year ending June 30, 2000.
(3) To transact such other business as may properly be brought
before the meeting or any adjournment or postponement thereof.
Shareholders of record at the close of business on August 4, 2000, are the only
shareholders entitled to vote at the Annual Shareholders Meeting.
By Order of the Board of Directors
/s/ Kelly D. Scott
-----------------------------
Kelly D. Scott
President
Irvine, California
August 10, 2000
<PAGE>
GISH BIOMEDICAL, INC.
a California Corporation
2681 Kelvin Avenue
Irvine, California 92614
PROXY STATEMENT
Annual Meeting of Shareholders
September 19, 2000
9:00 A.M.
Information Concerning the Solicitation
This statement is furnished in connection with the solicitation of proxies to be
used at the Annual Meeting of Shareholders ("Annual Meeting") of Gish
Biomedical, Inc., a California corporation (the "Company"), to be held September
19, 2000.
The solicitation of proxies in the enclosed form is made on behalf of the Board
of Directors of the Company.
The cost of preparing, assembling and mailing the proxy material and of
reimbursing brokers, nominees, and fiduciaries for the out-of-pocket and
clerical expenses of transmitting copies of the proxy material to the beneficial
owners of shares held of record by such persons will be borne by the Company.
The Company does not intend to solicit proxies otherwise than by use of the
mail, but certain officers and regular employees of the Company or its
subsidiaries, without additional compensation, may use their personal efforts,
by telephone or otherwise, to obtain proxies. The proxy materials are being
mailed to shareholders of record at the close of business on August 4, 2000.
A shareholder signing and returning a proxy on the enclosed form has the power
to revoke it at any time before the shares subject to it are voted by notifying
the Secretary of the Company in writing. If a shareholder specifies how the
proxy is to be voted with respect to any of the proposals for which a choice is
provided, the proxy will be voted in accordance with such specifications. If a
shareholder fails to so specify with respect to such proposals, the proxy will
be voted FOR proposals 1 and 2.
Abstentions and broker non-votes are each included in the determination of the
number of shares present and voting for the purpose of determining whether a
quorum is present, and each is tabulated separately. In determining whether a
proposal has been approved, broker non-votes are not counted as votes for or
against a proposal but are included in the determination of the number of shares
present and voting on the proposal.
Shareholders' Proposals for Next Annual Meeting
Shareholders' proposals intended to be presented at the next Annual Meeting must
be received by the Company no later than October 31, 2000, for inclusion in the
Company's proxy statement and form of proxy for that meeting. On May 21, 1998
the Securities and Exchange Commission adopted an amendment to Rule 14a-4, as
promulgated under the Securities and Exchange Act of 1934, as amended. The
amendment to Rule 14a-4(c)(1) governs the Company's use of its discretionary
proxy voting authority with respect to a stockholder proposal which is not
addressed in the Company's proxy statement. The new amendment provides that if a
proponent of a proposal fails to notify the
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<PAGE>
Company at least 45 days prior to the current year's anniversary of the date of
mailing of the prior year's proxy statement, then the Company will be allowed to
use its discretionary voting authority when the proposal is raised at the
meeting, without any discussion of the matter in the proxy statement.
Outstanding Voting Securities
Only shareholders of record at the close of business on August 4, 2000, are
entitled to vote at the Annual Meeting. On that day, there were issued and
outstanding 3,592,145 shares of Common Stock. Each share has one vote on all
matters other than, under certain conditions, the election of directors, (see
"Cumulative Voting"). A simple majority of the total shares represented at the
Annual Meeting is required to elect directors and ratify or approve the other
item being voted on at this time.
Cumulative Voting
California law and the bylaws of the Company provide that in elections of
directors, if any shareholder makes a proper request to cumulate such
shareholder's votes at a shareholder meeting prior to the vote for directors,
all shareholders present in person or represented by proxy at the meeting will
be entitled to cumulate their votes. Under cumulative voting, each shareholder
or proxy is entitled to multiply the number of shares to be voted on behalf of
that shareholder times the number of directors to be elected and distribute the
number of votes produced by the formula among one or more candidates as the
person voting the shares thinks fit.
Discretionary authority to cumulate votes represented by the proxies requested
hereby is solicited by the Company's Board of Directors because, in the event
that nominations are made in opposition to the nominees of the Board of
Directors, it is the intention of the persons named in the enclosed proxy to
cumulate votes represented by proxies for individual nominees in accordance with
their best judgment in order to assure the election of as many of the nominees
of the Board of Directors as possible.
Security Ownership of Certain Beneficial Holders and Management
The following table sets forth certain information as of August 4, 2000, except
as otherwise indicated, regarding the beneficial ownership of Common Stock of
the Company by (i) each person who is known to the Company to be the beneficial
owner of 5% or more of the Company's Common Stock, (ii) each director of the
Company, (iii) certain executive officers of the Company and (iv) all directors
and executive officers as a group. To the Company's knowledge, the beneficial
owners named in the table have sole voting and investment power with respect to
the shares.
<TABLE>
<S> <C> <C>
NAME SHARES BENEFICIALLY OWNED PERCENT OF CLASS (1)
Asset Value Fund Limited Partnership 549,800 15%
376 Main Street, Bedminster, NJ 07921
Craig Corporation 548,800(2) 15%
550 South Hope Street, Ste. 1825, Los Angeles, CA 90071
Dimensional Fund Advisors, Inc. 233,500 7%
1299 Ocean Avenue, Santa Monica, CA 90401
Jack W. Brown 301,027(3) 8%
James J. Cotter 2,383 *
Ray R. Coulter 21,450(4) 1%
John W. Galuchie, Jr. 549,800(5) 15%
John S. Hagestad 145,856(4) 4%
Kelly D. Scott 125,000(6) 3%
All officers and directors as a group, five persons 844,489(7) 23%
---------------------------
*Less than 1%
</TABLE>
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<PAGE>
(1) Percent of the outstanding shares of Common Stock, treating as
outstanding all shares issuable upon exercise of options held by
particular beneficial owners that are included in the first column.
(2) Craig Corporation is beneficial owner of Common Stock of Gish
Biomedical, Inc. through its controlling interest in Citadel Holding
Corporation.
(3) Includes 100,000 shares subject to options exercisable currently or
within 60 days. Mr. Brown resigned as President and Chairman in
September 1999 and as a director in March 2000.
(4) Includes 11,666 shares subject to options exercisable currently or
within 60 days.
(5) Mr. Galuchie is deemed to be the beneficial owner of Common Stock of
Gish Biomedical, Inc. through his position as Treasurer and Secretary
of Asset Value Management, Inc., the sole general partner of Asset
Value Fund Limited Partnership.
(6) Includes 60,000 shares subject to options exercisable currently or
within 60 days.
(7) Includes 83,332 shares subject to options exercisable currently or
within 60 days.
ELECTION OF DIRECTORS
Proposal 1:
Five directors will be elected at the Annual Meeting to serve until the next
Annual Meeting or until their successors shall have been chosen and qualified.
The Company's bylaws authorize a range in the number of directors between six
and eleven. There is currently one vacancy. All of the nominees named below have
indicated their willingness to serve. However, in the event any one or more of
such nominees shall be unable to serve, votes will be cast, pursuant to
authority granted by the enclosed proxy, for such person or persons as may be
designated by the Board of Directors, unless the Board reduces the number of
directors to be elected at the meeting. The Board of Directors recommends that
you vote FOR the election of each of the nominees named below. The names of the
nominees for directors of the Company are listed in the following table.
<TABLE>
<S> <C> <C> <C>
NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
James J. Cotter Attorney, Whitman Breed Abbott & 30 1999
Morgan LLP
Ray R. Coulter Practicing Attorney in Rancho Mirage, 67 1979
California
John W. Galuchie, Jr President, T.R. Winston & Company, Inc. 47 1999
.
John S. Hagestad Managing Director, Sares/Regis Group 53 1979
Kelly D. Scott President and Chief Executive Officer of 44 2000
the Company
</TABLE>
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<PAGE>
Nominee's business experience and other Directorships
Mr. Cotter has been an attorney with Whitman Breed Abbott & Morgan LLP since
1997. Previously, he was with Cecelia Packing Corporation. Mr. Cotter received
his L.L.M. and J.D. degrees in 1995 from New York University School of Law.
Mr. Coulter is a practicing attorney in Rancho Mirage, California, specializing
in corporate, Food and Drug Administration and health care law. For more than
the previous 5 years, he was the co-founder and chief financial officer of
Wintec Energy, Ltd., an alternate energy company.
Mr. Galuchie, a Certified Public Accountant and Chairman of the Company, is
principally engaged in the following businesses: (i) T.R. Winston & Company,
Inc., a securities broker/dealer, as President since January 1990 and director
since September 1989; (ii) Kent Financial Services, Inc., in various executive
positions since 1986 including the Treasurer and Secretary of Asset Value
Management, Inc., the sole general partner of Asset Value Fund Limited
Partnership ; (iii) Pure World, Inc., a manufacturer and distributor of natural
products, as Executive Vice President since April 1988; (iv) Cortech, Inc., a
biopharmaceutical company, as President and director since September 1998. Mr.
Galuchie served as a director of Crown NorthCorp, Inc. from June 1992 to August
1996, a director of HealthRite, Inc. from December 1998 to June 1999 and a
director of Golfrounds.com, Inc. from July 1992 to January 2000.
Mr. Hagestad is a Managing Director of Sares/Regis Group, a firm specializing in
real estate acquisition, development and management, located in Irvine,
California. He has been associated with Sares/Regis Group for more than 20
years.
Mr. Scott joined the Company in May 2000 as President and Chief Executive
Officer. Prior to joining Gish, Mr. Scott was employed for more than twenty
years by Sorin Biomedica and its predecessor, Shiley, Inc. a subsidiary of
Pfizer, Inc. He was most recently Managing Director of Sorin Biomedica Asia, a
position held since 1998. From 1996 to 1997 he was Managing Director of Sorin
Biomedica U.K. Ltd. and from 1994 to 1996 Director of National Accounts for
Sorin Biomedical, Inc.
Compensation of Directors
Directors who are not officers of the Company each receive a fee of $8,000 per
fiscal year and an additional fee of $500 for attendance at each Board of
Directors' and committee meeting. Officers of the Company do not receive
additional compensation for attendance at Board of Directors' meetings or
committee meetings. Effective February 1, 1999, the Board approved the waiver of
Directors' compensation until such time as the Company returns to profitability.
Board of Directors' Affiliations
No affiliations exist between the Company and the non-employee nominees to the
Board of Directors.
Committees of the Board of Directors
Pursuant to the Company's by-laws, the Board of Directors has appointed four
standing committees from among its members. These committees are the Audit,
Compensation, Executive and Nominating Committees.
The function of the Audit Committee is to review and report to the Board on the
financial statements of the Company prepared by management and to review and
report to the Board the results of audit examinations by the Company's
independent public accountants. The members of the Audit Committee are Ray R.
Coulter, John W. Galuchie, Jr. and John S. Hagestad
4
<PAGE>
The Compensation Committee is a standing committee of the Board of Directors of
the Company. The Compensation Committee is responsible for establishing and
evaluating the effectiveness of compensation policies and programs for the
Company and for making determinations regarding the compensation of the
Company's executive officers, subject to review by the full Board of Directors.
The members of the Compensation Committee are John S. Hagestad and Ray R.
Coulter, both of whom are non-employee directors of the Company.
No member of the Compensation Committee is a former or current officer or
employee of the Company or a subsidiary of the Company. Furthermore, there are
no Compensation Committee interlocks between the Company and other entities
involving the Company's executive officers and board members.
The function of the Executive Committee is to advise the Chief Executive Officer
on matters of importance to the Board and the Company, between regularly
scheduled meetings of the Board of Directors. The members of the Executive
Committee are John S. Hagestad and John W. Galuchie, Jr.
The Nominating Committee is responsible for considering and making
recommendations to the Board concerning the director nominees for approval by
the Board and the shareholders. The members of the Nominating Committee are
John S. Hagestad and John W. Galuchie, Jr.
Meeting Attendance
There were four meetings of the Board of Directors during the fiscal year ended
June 30, 1999 and one meeting of the Audit Committee. All directors attended
more than 75% of the meetings of the Board and of the committees of which they
are members.
Executive Compensation
The following table sets forth three years of compensation history for the Chief
Executive Officer (the "Named Executive"). There was no other executive officer
serving at the end of the last completed fiscal year, nor any additional
individuals with salary and bonus for the last fiscal year exceeding $100,000.
<TABLE>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
-------------------------------------------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Other Annual Securities All Other
Name and Bonus Compensation Underlying Compensation
Principal Position Year Salary($) ($) (1) ($) (2) Options (#) ($) (3)
------------------ ---- --------- ------- ------- ----------- -------
Jack W. Brown 1999 191,000 28,650 4,926 -- 250
Former President and Chief 1998 175,500 47,750 5,269 225,000 250
Executive Officer of the 1997 160,000 26,240 5,281 -- 250
Company
</TABLE>
(1) Bonuses paid to the Named Executive are pursuant to annual incentive
compensation programs established each year for selected employees of
the Company, including the Company's executive officers. Under this
program, performance goals, relating to such matters as sales growth,
gross profit margin and net income as a percentage of sales, and
individual efforts are established each year. Incentive compensation,
in the form of cash bonuses, was awarded based on the extent to which
the Company and the individual achieved or exceeded the performance
goals.
5
<PAGE>
(2) Other Annual Compensation consists of the personal use portion of
company-provided automobiles and premiums paid on executive disability
policies.
(3) All Other Compensation consists of the Company's matching contributions
to the Gish Salary Savings Plan under Section 401(k) of $250 in each
fiscal year.
Option Grants in Last Fiscal Year. The Named Executive Officer identified in the
Summary Compensation Table did not receive a grant of stock options during the
year ended June 30, 1999. The Company has never granted stock appreciation
rights (SAR's).
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Values. The
following table sets forth, for each of the executive officers named in the
Summary Compensation Table above, each exercise of stock options during the year
ended June 30, 1999 and the year-end value of unexercised options:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options In-the-Money Options
Acquired on Value at Fiscal Year End 1999 at Fiscal Year End 1999
----------------------- -------------------------
Name Exercise (#) Realized ($)(1) Exercisable Unexercisable Exercisable (2) Unexercisable(2)
---- ------------ --------------- ----------- ------------- ---------------- ----------------
J. Brown 56,000 $22,736 169,000 - $47,489 -
</TABLE>
(1) Excess of market price over exercise price, on the date of exercise.
(2) Excess of $3.00 (market price at year end) over exercise price.
Employment Contracts
Jack W. Brown joined the Company in 1980 as the Vice President of Marketing.
Shortly thereafter in 1980 Mr. Brown was elected President and Chairman of the
Board of Directors. In September of 1999 Mr. Brown resigned as President and
Chairman and assumed the position of Managing Director of Product Development of
the Company. An employment agreement provides for Mr. Brown's continued
compensation by the Company until September 15, 2001 at an annual salary of
$100,000. Mr. Brown resigned from the Board of Directors in March 2000.
Mr. Scott joined the Company in May 2000 as President and Chief Executive
Officer. Mr. Scott entered into a written employment agreement with the Company
whereby he is entitled to an annual base salary of $180,000, a signing bonus of
$20,000 upon the commencement of his employment, and a bonus to be determined by
the Board of Directors based on the achievement of specified corporate
profitability targets. In the event that his employment is involuntarily
terminated on or before May 18, 2001, he will be entitled to severance
equivalent to two times the annual salary then in effect on the date of such
termination. In the event that involuntary termination occurs after May 18, 2001
but before May 18, 2002, he will receive a payment equal to two times the annual
salary then in effect, less the amount of base salary received from May 18, 2001
until the date of termination. Mr. Scott was granted options to purchase 190,000
shares of the Company's Common Stock at an exercise price of $3.00 per share.
Options will vest and become exercisable at the rate of 60,000 shares on May 18,
2000, 40,000 shares on May 18, 2001, 40,000 shares on May 18, 2002, and 50,000
shares on May 18, 2003.
6
<PAGE>
Profit Sharing Plan
The Company has a Salary Reduction Profit Sharing Plan, established under
Section 401(k) of the Internal Revenue Code, in which all employees are eligible
to participate (the "Profit Sharing Plan"). Under the provisions of the Profit
Sharing Plan employees may cause up to 15% of their salary to be contributed to
the Profit Sharing Plan. Contributions by employees are held in a trust
established under the Profit Sharing Plan and invested as directed by each
participant. A participant's contributions and the earnings thereon are payable
to the participant or his or her survivors upon death, disability or retirement
in a lump sum or installments over not more than 15 years as directed by the
participant. The Company matches up to $250 of annual contributions by each
employee. For the plan year ended December 31, 1998, the Company made
contributions to the Profit Sharing Plan totaling $51,000 and paid
administrative costs of $21,000. For the plan year ended December 31, 1999, the
Company made contributions to the Profit Sharing Plan totaling $43,000 and paid
administrative costs of $6,000. Non-employee directors are not eligible to
participate in the Profit Sharing Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon its review of the copies of reporting forms furnished to the Company,
the Company believes that all filing requirements under Section 16(a) of the
Securities Exchange Act of 1934 applicable to its directors, officers and any
persons holding ten percent or more of the Company's Common Stock with respect
to the Company's fiscal year ended June 30, 1999, were satisfied.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Proposal 2:
Subject to ratification by the shareholders, the Board of Directors has
reappointed Ernst & Young, LLP as independent auditors to audit the financial
statements of the Company for the current fiscal year. Ernst & Young, LLP has
served as the Company's auditors since 1979 and has issued its report on the
Company's financial statements for the last twenty years.
Representatives of Ernst & Young, LLP are expected to be present at the Annual
Meeting and will have the opportunity to make a statement if they so desire and
will be available to respond to appropriate questions.
The Audit Committee and the Board of Directors recommend the shareholders vote
FOR such ratification.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors is not informed
of any matters, other than those stated above, that may be brought before the
meeting. The persons named in the enclosed form of proxy or their substitutes
will vote with respect to any such matters in accordance with their best
judgment.
A copy of the Company's Annual Report to Shareholders, including Financial
Statements for the three fiscal years ending June 30, 1999, 1998 and 1997,
together with the report of Ernst & Young, LLP therein, has been mailed to each
shareholder together with this Proxy Statement.
By Order of the Board of Directors
/s/ John W. Galuchie, Jr.
-------------------------------------
John W. Galuchie, Jr.
Chairman
Dated August 10, 2000
7
<PAGE>
GISH BIOMEDICAL, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
John W. Galuchie, Jr. and James J. Cotter, Jr., and each of them, with full
power of substitution are hereby appointed proxies to vote all shares of stock
which the undersigned may be entitled to vote at the Annual Meeting of
Shareholders of Gish Biomedical, Inc. (the "Company") to be held on September
19, 2000 at the Company's offices at 2681 Kelvin Avenue, Irvine, California, at
9 a.m., Pacific Daylight Time, or any adjournment thereof, as follows:
(1) ELECTION OF DIRECTORS:
FOR ALL NOMINEES [ ] WITHHOLD FOR ALL [ ] EXCEPTIONS [ ]
LISTED BELOW NOMINEES LISTED
BELOW
James J. Cotter, Jr. Ray R. Coulter John W. Galuchie, Jr.
John S. Hagestad Kelly D. Scott
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark
the exceptions box and write the name(s) of the nominee(s) in the space provided
below.
Exceptions -------------------------------
(2) TO RATIFY APPOINTMENT OF ERNST & YOUNG, LLP AS AUDITORS FOR THE FISCAL YEAR
ENDING JUNE 30, 2000:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) In their discretion, the proxies named herein are authorized to vote upon
such other business as may properly come before the meeting or any adjournment
thereof, including procedural and other matters relating to the conduct of the
meeting.
This proxy will be voted as directed. Unless otherwise directed, this proxy will
be voted for the election of the five directors and for proposal 2.
Signature Date
----------------------------------------- --------------, 2000
Note: Please sign exactly as your name appears hereon. (When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Please date, sign and return this card in the enclosed envelope.
8
